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President Barack Obama is applauded after signing the Affordable Health Care for America Act during a ceremony with fellow Democrats in the East Room of the White House March 23, 2010 in Washington, DC.

Win McNamee/Getty

ACA slows growth in health costs

During the debate on health care, even before the Affordable Care Act passed, there were widespread demands that officials do something about escalating costs. If “Obamacare” was to be a long-term success, it would have to help reduce health care spending.

It looks like the law’s many detractors will have to cross another complaint off their list.

Health care spending since the 2010 passage of the Affordable Care Act has risen by 1.3% a year, the lowest rate ever recorded, and health care inflation is the lowest it has been in 50 years, a report released Wednesday by the White House shows.

An economy hobbled by the recession and 2008 economic crisis played a role in some of the reduced spending growth, officials said, but the report cited “structural change” caused, in part, by the law.

How good are the number figures? According to a new report published by Jason Furman, chairman of the White House Council of Economic Advisers, over the last three years – the period since “Obamacare” became the law of the land – per capita health care spending has grown at a rate of 1.3%. “This is the lowest rate on record for any three-year period and less than one-third the long-term historical average stretching back to 1965,” Furman noted.

Moreover, thanks to health care reform, inflation for health care goods and services is “currently running at just 1 percent on a year-over-year basis, the lowest level since January 1962.”

How do we know the Affordable Care Act deserves credit, and this isn’t just a cyclical shift, or a reduction resulting from weak economic growth?

“The fact that the health cost slowdown has persisted so long even as the economy is recovering, the fact that it is reflected in health care prices – not just utilization or coverage, and the fact that it has also shown up in Medicare – which is more insulated from economic trends, all imply that the current slowdown is the result of more than just the recession and its aftermath,” the report stated. “Rather, the slowdown appears to reflect ‘structural’ changes in the United States health care system, a conclusion consistent with a substantial body of recent research.”

The ACA is a contributing factor because it includes reductions in Medicare overpayment to private insurers and medical providers, and incentives for hospitals and doctors to improve their quality of care, the report stated.

“Recent research implies that reforms to Medicare will have ‘spillover effects’ that reduce costs and improve quality system-wide,” the report stated. “Accounting for ‘spillovers’ implies that the ACA’s effect on health care price inflation may be much larger than previously understood.”

In terms of the real-world impact, this means more affordable care for consumers and more savings in government spending.

In other words, it’s the sort of thing Republicans should be pretty happy about – which generally means they’ll ignore the news and/or issue a press release declaring the opposite, assuming no one will know the difference.